Kai Johan Jiang answers questions in (Chinese) Auto Business
January 29, 2013 in News
Here is an interesting interview with Kai Johan Jiang, CEO of Statepower group which owns NEVS. The article is translated and published online by ChinaAuto Web (original article here)
1. Why choose Qingdao, Shandong as the Chinese home of Saab?
Jiang: “After the acquisition of Saab, many Chinese cities became interested in me, in Saab. Some in coastal areas sent teams to me, seeking partnership. They made generous offers, including money and tax benefits…When the Qingdao team came, however, they did not start by talking about preferential policies, but their leadership’s ability for innovation, their longing for a local auto industry and plans for the future.”
“Qingdao provides an opportunity for me to help Shandong, where I have my origins, fulfill a dream. I was told that officials of Qingdao for long had a strong interest in sedan-building. At present, the city has a well-developed auto parts industry, serving various vehicle brands based in Europe, America, or Japan. What’s more, before the end of 2012, Qingdao acquired the qualification for having a whole-vehicle import port and completed integrating resources for the new Huangdao District. For Saab looking to create a Chinese production capacity, this is a rare opportunity not to be missed.”
“Shandong province is a leader in the Chinese economy, and yet has no locally-based sedan-making ventures. Qingdao, a key city in Shandong, has tried unsuccessfully before (to set up one). It is not fitting for Shandong and Qingdao, which have advanced economies, not to have a sedan-making capacity.”
“Qingdao is faithfully fulfilling the promises it made in earlier talks with us, which concern setting up a whole-vehicle import port and an economic zone along the west coast. This is the style of the Shandong people. They are reliable, always keeping their word.”
2. What favorable terms did the Qingdao government offer to NEVS?
Jiang: “As this concerns the government, it is not appropriate for me to make long remarks.”
“According to the current, preliminary plan, the factory would be constructed near the port and be easily accessible. The cost and size of the land needed for building the factory is to be determined.”
3. As one of the participants in the Saab project, Qingdao Qingbo Investment Co. Ltd. was previously unknown. It was registered on Jan 7, the very day when the NEVS-Qingdao agreement was signed. Some say that Qingbo paid 2 billion Yuan for 22% of NEVS. Is this true?
Jiang: “It is not wrong to say that Qingbo was established specifically for the Saab project. However, this understanding is partial. Qingbo was formed by the local government of Qingdao and of the Huangdao Economic Development Zone. Yet, it has a greater significance by being a platform that is to help grow various green and innovative enterprises in Qingdao.”
“The figure of 22% is accurate. To be more precise, it was through a capital increase that Qingbo acquired a 22% stake in NEVS. The stake’s price actually exceeded 2 billion Yuan. The exact amount is a commercial secret.”
4. In China, a permit or license from the central government is needed for establishing an automaking venture. Yet, for years the government has no longer awarded new permits, trying to limit the number of automakers in the country. For foreign auto companies attempting to set up production in China, they are required to work with a native that has a permit. How will NEVS get such a permit for its planned Saab factory in Qingdao?
Jiang: “At present, Saab is a foreign company to China, and we indeed do not have a production license. But we will apply for one according to government requirements. We are looking into the feasibility of forming a joint venture with a local company (that has a license).”
“The new government of China attaches great importance to innovation and improving people’s lives. Talking about innovation, if conditions allow, existing conventions may be reformed. And State Power Group Co. Ltd. (a sister company of NEVS and controlled by Jiang) is one of the largest enterprises in China that focus on improving people’s lives. In the last ten years, it created cash incomes of 7 billion Yuan for the country’s nearly 800 million peasants–in direct or indirect ways.”
5. What Saab models will be built in Qingdao? Is the plan to roll out 400,000 Saab cars a year in Qingdao over-ambitious?
Jiang: “Some claim that the 9-3 is outdated. The truth is, since 2005 Saab engineers have continued the R&D based on the 9-3, although for various reasons, we have not fully realized the development results. Thus for me, 9-3 is just a codename. There will be all-new 9-3s in the future.”
“We will soon finish the development of the Phoenix platform. Based on this flexible platform, we will unveil a line of new Saab models.”
“Shandong alone has a market ten times that of Sweden. China as a whole holds much greater potential. With a proper marketing approach, the planned production capacity will be fully matched by demand.”
“We will try to win government procurements and build cars that meet the standard for government-employed vehicles. In particular, we will target government cars, traditional or electric, that have a price tag below 180,000 Yuan and an engine displacement below 1.8L. We will also take aim at taxi fleets in Shandong.”
“Production cost, product quality, and pricing are three crucial factors. Many (who are skeptical about the project) overlooked two things. First, high tariffs and taxes were the fundamental cause of the high pricing of Saabs in China. Second, Saab used to rely on some small parts-suppliers, some of them even serving only Saab; these suppliers were often underfunded on R&D, unable to upgrade their products timely or control costs effectively…. By contrast, there are companies in China that provide excellent parts and services, which really surprised me. Some of them do a better job than their overseas rivals…. If Saab can overhaul its supplier system and employ more local parts, its prices will be lowered to a range attracting ordinary consumers.”
6. According to the terms of acquiring Saab, NEVS can use the name Saab but not the Griffin logo. Will NEVS launch a new Saab logo?
Jiang: “We are in the process of designing a new Saab trademark. It may actually be a good thing to drop the Griffin logo. I am happy not to have it. In the history of Saab Auto, the Griffin logo appeared rather late. It was created after Scania-Saab AB was founded in the 1960s. For Saab, a new visual identify will signify a new beginning. Saab will still be Saab. And the change of logo will make Saab more distinct… The new design will soon be shown to the public.” (The new Saab logo unveiled by NEVS on Jan 14)
7. When another automaker, China Youngman Auto, attempted to buy Saab, General Motors, a previous owner of Saab, pronounced objections to its plan to produce Saabs in China, citing the need to protect technological assets. Will GM do the same thing to NEVS?
Jiang: “I have a high respect for GM. Other automakers can learn much from it. But I haven’t had any significant contact with them. One thing is for sure: GM did not try to stop the Saab transaction because it did not want to see Chinese-made Saabs or someone else to make Saabs with ICEs; rather, GM wanted to hand Saab to the right people. After all, as its former owner, GM has an emotive tie to Saab. GM does not want to see Saab remain on the downward track. Thus, so far, GM has not created any trouble (for NEVS). We have had ‘green lights all the way.’”
8. What’s Jiang’s response to the wide skepticism about NEVS’ plan to save Saab?
Jiang: “I understand that there is a lot of skepticism out there. Some say I am just a show maker, which I am not.”
“Ten years ago, people said I was show-making in promoting the technology that generates electricity through burning crop straws. I spent ten years proving the value of this technology. Similarly, I can use ten years to prove the value of Saab and build Saab into the most successful auto brand. In making the transition, Saab has little burden, with its debts settled and employees compensated. The bankruptcy is more like a challenge, a unique growth opportunity.”
“Since the start of acquisition talks, my hairs have all turned white. You can see the comparison through the photos of me. Before, I had few white hairs.”
BIG Thanx to baas900i for the tip!
JH said on January 29, 2013
Very, very interesting to read – thanks for sharing this! Kai Johan Jiang seems to know what he is doing, and I am cautiously optimistic about the future of Saab!
Alex said on January 29, 2013
“Saab taxi fleet”
I cried a bit on the inside.
Tim said on January 29, 2013
Why? There is one in Trollhättan and in Stockholm?
Alex said on January 29, 2013
I don’t know, it might be just me, but a chinese taxi fleet feels like a step towards “ordinary vehicles”
Still it’s good news and can barely wait for the production restart.
Tim said on January 29, 2013
I ride in taxis almost every day at work and I for one would love to be driven around in a Saab 9-3 taxi rather than all the Volvos I’m being shipped around in =P
Lots of businessmen ride in VIP taxis…
Alex said on January 29, 2013
Heh yeah, it’s a matter of perspective. Where I’m from, most taxis are cheap, poorly maintained cars. Maybe it’s this comparison that made me upset.
But seeing things your way, yes it’s much nicer to be driven around in a Saab taxi
Tim said on January 29, 2013
I can understand your point of view! =)
Greg Abbott said on January 29, 2013
When I was in Stockholm in 2011, the taxi I took from the train station to my hotel was a relatively new Audi A8.
It was also a very expensive taxi ride, which is probably related in some way to the underlying cost of the vehicle.
JH said on January 29, 2013
I agree with Tim here – the more Saabs on the street the better! More people will experience Saabs when they happen to travel in a Saab taxi, and then hopefully go and check them out at their Saab dealer and ultimately buy one. And, as Tim said, Saab taxis are quite common here in Sweden.
Bernard said on January 29, 2013
I don’t see Saab taxis as being any different than Mercedes taxis in Stuttgart (or in Marrakesh).
VW taxis are ubiquitous in China, and that hasn’t hurt their sales to private and government customers. If anything, it probably promotes the brand’s image of reliability.
No 9 said on January 29, 2013
Merc taxis are found all over the world.
Jasper said on January 29, 2013
All of the many taxis I rode in in when living in Germany were either Mercedes (95%) or BMW.
The owners favored the Mercedes do to less expensive maintenance (or so they said).
So a SAAB would be in good company
900SE said on January 29, 2013
7. When another automaker, China Youngman Auto, attempted to buy Saab, General Motors, a previous owner of Saab, pronounced objections to its plan to produce Saabs in China, citing the need to protect technological assets. Will GM do the same thing to NEVS?
Jiang: “I have a high respect for GM. Other automakers can learn much from it. But I haven’t had any significant contact with them. One thing is for sure: GM did not try to stop the Saab transaction because it did not want to see Chinese-made Saabs or someone else to make Saabs with ICEs; rather, GM wanted to hand Saab to the right people. After all, as its former owner, GM has an emotive tie to Saab. GM does not want to see Saab remain on the downward track. Thus, so far, GM has not created any trouble (for NEVS). We have had ‘green lights all the way.’”
I thought we finally got rid of GM, what am l missing ?
Angelo V. said on January 29, 2013
I’m very skeptical about that answer—-is it honest naievity, or an contrived lie? We’re to believe that GM was obstructionist against Youngman because GM has an emotional tie to Saab and wants to see Saab in the right hands (for the best chance at success, in China and elsewhere maybe)? Really? Does that mean NEVS will get the greenlight to restart the 9-5 and 9-4 this Summer? Please. Please let this be true, but I’m skeptical. Did he hear what the buffoon GM spokesghoul was saying last year?
Troels, Denmark said on January 29, 2013
This answer is clearly political. NEVS will not say anything bad about GM, while they might be negotiating with them about engines and gear-boxes for the (“current”) 9-3. The 9-5 we will surely not see before a new generation based on the Phoenix-platform is developed.
Very, very good to read that NEVS will finish the Phoenix-platform as soon as possible!!
Angelo V. said on January 29, 2013
You make a very good point that I don’t think I’ve considered—-but one that I think Tim has tried to make and maybe I haven’t taken seriously. That is—-maybe NEVS utter silence (or close to it) has more to do with relationships (particularly with GM????) and less to do with incompetence. If they are having very delicate negotiations with different parties, especially GM—-they might not want ANYONE to know what they’re thinking, for fear of derailing what they’re trying to accomplish. I’m so sick of “staying calm and carrying on” and I’m anxious for real news—-and was discouraged yesterday that Tim rates the chances of the U.S. getting new Saabs by 2017 as only a 3 on a scale of 10. I think so many of us just want to know what to expect—-so we can plan vehicle purchases—-yes, even 4-5 years out. I think many of us really would hold onto a car and pay for repairs longer—–or if we absolutely needed a “new” car, might opt to buy a reliable, affordable used car and save as much money as possible for a future Saab purchase—-if only we know that a future Saab purchase might be possible in a few years time. Absent that information, I think most of us would look to find a new car company to be excited about—-to be an enthusiast for.
Tim said on January 29, 2013
Well you can always buy a newer used Saab or a brand new one, there are still lots left in the US from what I’ve heard.
We as fans are not entitled to anything, that is the rule we have to live by. If we can accept that life is much easier =)
But even so, that doesn’t stop us from trying to find out things on the side anyway =)
Angelo V. said on January 29, 2013
Funny story about this—-had a discussion with a good friend of mine who is a corporate attorney here in the Washington, DC area—-about the entire Saab saga. As I was talking to him—-beginning with pre-GM Saab ownership, through the GM years, to Muller/Spyker and now to NEVS—-and detailing everything about what has happened since December 2011, with the bankruptcy, the bids, etc., through to the present circumstances—-he looked at me like I was crazy, as if to say, how do you know so much about this, and WHY do you know so much about this? The “how” is easy—–Saabs United! The “why” is perplexing. Why do ALL OF US continue to absorb this enormous amount of news and information and continue to be on the edge of our seats about what will happen next?
Red J said on January 29, 2013
Because we dream of a better world, where sitting in a car is not coupled with pain after 70 km.
Today I had to drive the company car
Hans H said on January 29, 2013
I know the feeling.
100%Saab said on January 30, 2013
Because it matters. I still own 2 Saabs.
Silas said on January 29, 2013
I had the same thoughts. A little bit of excitement came thinking the 9-5 SC and/or the 9-4 would come alive again. This would definitely solve the engine problem for production starting later this year for the 9-3. I am still hesitant to believe that GM would actually come back to help SAAB continue with all they did to keep them down and out.
SaabKen said on January 30, 2013
Um hello Mr. Jiang – GM has been pulling SAAB on a downward track since its initial 50% purchase of SAAB in 1989/90. You can pull your head out of the sand now ……………
Tim said on January 30, 2013
That is simply not true, check out the 1,8 hour long interview we posted with former Saab executives and you’ll learn the truth about GM
Silas said on January 30, 2013
can you provide a link to that interview?
Angelo V. said on January 29, 2013
Yes, some of the answers are interesting. I wish the questions were. My questions? When. And…WHEN? Then I’d follow up with, WHEN? WHERE? WHEN?
maanders said on January 29, 2013
“Production cost, product quality, and pricing are three crucial factors. Many (who are skeptical about the project) overlooked two things. First, high tariffs and taxes were the fundamental cause of the high pricing of Saabs in China. Second, Saab used to rely on some small parts-suppliers, some of them even serving only Saab; these suppliers were often underfunded on R&D, unable to upgrade their products timely or control costs effectively…. By contrast, there are companies in China that provide excellent parts and services, which really surprised me. Some of them do a better job than their overseas rivals…. If Saab can overhaul its supplier system and employ more local parts, its prices will be lowered to a range attracting ordinary consumers.”
While this makes obvious sense for any Saab built in China for the Chinese market, does this also imply that if Trollhatten builds any Saabs for the European market (or even North America) that they would also be sourcing parts from Chinese suppliers? Doesn’t that sort of contradict earlier discussions here that the Chinese consumers value European brands as being more desirable because they are more “upscale” than Chinese produced cars?
Bernard said on January 29, 2013
Lots of OEM parts are made in China. It’s the biggest automotive market in the world.
SaabKen said on January 30, 2013
China ….. the biggest of everything in the world ……..
Thylmuc said on January 30, 2013
I read somewhere that in the seventeenth century, China had one third of the global gross product.
Saabgun said on January 29, 2013
I think you would be amazed how much chinese parts are found in products “made in EC” or “made in the USA” . You can lower the price not only with an inferior quality but also by a bigger amount of products. R&D cost are the same for 80.000 parts as for 400.000. I’m not afraid of a good priced mass-product.
BMW Rider said on January 29, 2013
That’d be pretty funny and unbelievable if GM saved Saab a second (or is it 3rd?) time. With all the problems they are having in Europe with Opel I’m not so sure Saab is on their radar except for that Muller lawsuit hanging out there and some warranties coming to an end in the US, however the recent news that GM is reevaluating the partnership in China and want to fix Europe operations is interesting but probably means nothing in relation to Saab.
http://www.foxbusiness.com/news/2013/01/27/gm-rethinks-emerging-market-strategy-hedges-on-china-partner/
zippy said on January 29, 2013
I’ll believe it when I see it but for me Saab is gone. Hasn’t stopped me thinking about grabbing a NG9-5 though later this year though. Crazy? I’d be interested in what you all think.
Tim said on January 29, 2013
I drove one for two weeks, loved it!
Belfast_Saab said on January 30, 2013
I’m so tempted too. My 2.8T semi-automatic is crippling in fuel costs. A NG9-5 TTiD would cut running costs and pay for itself if only I could find a UK buyer for the 9-3….
BMW Rider said on January 30, 2013
It depends in my opinion. I have a 2011 9-5 Aero. It’s a great car, great to drive and one of the most comfortable cars I’ve ever driven but I wouldn’t buy it again for daily driver use. If I was collecting or having it as a second car maybe but for actual primary transportation, as good of a car as it is, with the service, parts and warranty situation I’d bypass it if I had it to do over again. I know…everyone says the parts situation is fixed. Tell that to someone who needs a windshield with HUD or anyone with a Nav system with maps that are 4 years old. Warranty…well now I have to buy one if I want one…service. Well oil changes are simple enough, the electronics are not anything like a 9-3 though. Pity because it is a really nice car.
scand said on January 30, 2013
Buy 2 and use the second as a parts car. Unfortunately.
scand said on January 30, 2013
He states he is targeting a market for less than 180000 yuan, which is 21000 Eur, or $28000. By comparison, a Chinese audi A6 starts at 360000 yuan ( and goes up to 700000 yuan). Thus, in Chinese terms, we are talking something pretty downmarket.
The average shandong taxi (per google) isn’t an A6, or anything like that, it’s something like an old VW Passat, circa the early 90′s.
I read nothing in that interview that suggests that whatever product they come up with will be anywhere close to the market position of saabs of old.
I fear it could well become some sort of caricature product. Saab, in name, but that’s about it.
Hope I’m wrong, but branding is far more than just slapping a badge on a product.
RS said on January 31, 2013
@scand, do you know how much they charge for a base A4 and Passat in China? Those are probably the main competition for the 9-3, not A6.
scand said on January 31, 2013
@RS. Audi A4L. (!!) is 274000 yuan, base. Even the audi A1 is 224000 yuan
A vw Tiguan starts at 189000 yuan. (And goes to 300 000)
If they are targeting “up to 180000 yuan”. We are not talking premium territory.
RS said on January 31, 2013
Something must have been lost in translation.
I’m sure all the talk about being a premium manufacturer hasn’t changed(?). Starting at VW prices and reaching the high end Germans is the only strategy that will work imho.
Too many looked at Saab not being either affordable or premium enough since forever. Just as long as the Swedish engineers are allowed to do their thing and not held back.
In the blizzard yesterday I’m pretty sure I was one of the very few who actually enjoyed my 4 hours on the road. Strangely very few BMW or MB’s anywhere to be seen. I suspect they were stuck somewhere?
Francois said on January 30, 2013
Well I guess it’s a bit early for having any certainties about what’s going to be produced in Trollhättan and how it’s going to be marketed…
NEVS is going to relaunch the 9-3, but redesigned as I’ve read in the medias… However we still don’t know much about the engines, gearboxes and other parts/components… The real restart might be more when the Phoenix platform is ready and I’m eager to see which vehicles are going to be developed upon it
What’s make me a bit sad is the fact that Mr. Jiang is also involved in a Swedish cellulosic ethanol producing company (NBE Sweden), but there’s unfortunately no plans to restart BioPower/Flexfuel engines production
At least that’s xhat I recently got from Mikael Ostlund as reply to my e-mail
Mr. Jiang may have gray hair as it’s a huge challenge
Francois said on January 30, 2013
For those of you who are considering the purchase of a 9-5NG, I would say just do it as you may regret all your lives not to have done it
There are also some used ones a bit everywhere…. I’ve seen a few ones in the french classified ads….mostly 2.0 TiD and 2.0 TTiD…
That would be a pity as it’s a so beautiful car
There are probably some new ones in the US, those sold in auctions last June
Chris Hansel said on January 30, 2013
Francois: We have a used car dealer here in Scottsdale that has about 15 of these cars that he purchased off the Newark dock. They are always on eBay and he is asking about $ 26,000 each for them. If anyone has more information about them, please post. I can post photos.
As far as our Chinese friend is concerned. I amazed that anyone who is old enough to have been waving around the cultural Red Book is today guiding a capitalist car company. Or perhaps not? Hard to figure, but even thinking about it gives me a headache. Can’t comment becauses it involves the government? Why?
100%Saab said on January 30, 2013
The Chinese saved Buick. They have the money and ability to save Saab, too. (all by themselves if they want to)
mattea said on January 30, 2013
Did everyone miss he say ” an engine displacement below 1.8L”
Is this related to the Next 9-3 or to the curent?
I gues next.
Tim said on January 30, 2013
That’s sadly the future. Saab was working on a 1,6 liter engine with a top hp of somewhere in the region of 200-220 running on E85 and Gasoline. We will just have to get used to smaller displacement to abide by environmental requirements.
OddJob said on January 30, 2013
Don’t be sad. Smaller turbocharged engines are what Saab engine guru Per Gillbrand predicted 30 years ago. Occassionally Fiat Powertrain has a 1750 cc direct injected turbo with 235 hp/340 Nm used in the Alfa Giuletta, wouldn’t that be something towish for?
saaburban said on January 30, 2013
Reading between the lines this is a scripted piece of propaganda:
- Kai Johan is addressing his message to the Chinese Goverment, the Chinese joint venture partner & GM.
- The message is: Saab is a Chinese owned Foreign Company, building up a local Chinese production capability, that will support Local Chinese suppliers, developing a long term business in low end premium cars.
The Swedish message is not contradicticting the Chinese one;
- Saab will continue to build and develop cars in Sweden, it has it’s first huge order (possibly from Chinese gov) and will restart the production of the 9-3 with the help of existing Swedish and international suppliers.
Saab will develop multiple new models based on the 9-3 technologies, where the evolved 9-3 / Phoenix platform will be the base to develop a range of different models.
OddJob said on January 30, 2013
Totally agree with you (apart from the “low end premium cars” part, lets wait and see) this is politics. It also sends a message that they are planning to use more Chinese suppliers to reduce cost and raise “Chinese content”, could be a smart business idea.
It also seems to fit well with the new logistics in Western Sweden where Gothenburg has weekly arrivals of the largest container ships from China and dual-track railway up to Trollhättan.
My only worry is for the Swedish suppliers, they have to make good connections with their Chinese counterparts to make use of this situation.
Angelo V. said on January 31, 2013
Can you read anything else into this—-particularly if they’ll sell cars in North America again, and when???!!!
OddJob said on January 31, 2013
Well,first of all they need to get all the bits and pieces together. Then they need production to be up and running. This will take some time, expect the North American launch to be six months behind the European (approvals etc). Meanwhile you’ll have the opportunity of your life to buy a 2010-2012 Saab at bargain prices.
Hogge said on January 31, 2013
I hope to GOD that Saab make a new Sonett or something similar.
A tiny, tiny sports car that actually looks like a sports car, rather than a hot hatchback. With XWD, iQuon, low fuel consumtion and a low price.
Tim said on January 31, 2013
I just watched Top Gear and they praised Lancia, it was a cheap, fast sports car, problem was that when you build something that is impressive but low price, you’ll need to cut back on the quality which is exactly what Lancia did…
Hogge said on January 31, 2013
Well, Toyota did the same with the GT86, and it’s brilliant. So brilliant in fact that Toyota are planning to make an even smaller and cheaper sports car.
In fact, I’d like to see the new Sonett based on the GT86, only with new front body panels, iQuon and XWD. Oh, and they can make it cheaper by throwing out the rear seats. And the telescoping headlight washers. And the electricly heated seats. And the two zone AC.
Francois said on January 31, 2013
@ Chris Hansel
I’ve found easily the 14 9-5NG’s from Benz & Beemer on autos.yahoo.com with all details
They also have a dozen 2011 9-3s priced around $20,000
Another dealer has a few brand new 9-4X in the
$40,000 range…
I guess it’s possible to retrieve online most of those 900 SAABs which were stored in Newark and auctioned
Chris Hansel said on February 1, 2013
Francois:
Wow, I didn’t know that. I will stop be on the way home Monday and try to take some photos of these cars. I would guess they have them parked in the rear of the building as all they have in the front is 2, 9-5s and one 9-3. This maybe be the largest surviving new Saab collection in the world. I will send them in to Jason. If you decide to buy one, fly in and we will show you the sites.
Francois said on February 16, 2013
Have you had a chance to see them all?
Well, yes you’re right. Now we can only find brand new SAABs only in the US as in Europe they are almost all sold out. So if we want to purchase one, we’ll have to cross the Atlantic
Or wait until the production of 9-3s is resumed in THN, but….which engine is going to be chosen ??? …
Amoing those 900 SAABs that were auctioned, some of them probably have found owners, but most are certainly still for sale….among them the first BioPower sold in the US
As to me, I’d purchased my 9-3 BioPower 2 years ago and it has just 20.000 miles, so I’m going to keep it for the longest time as possible